1. Firewood prices in places from northern California to Boston and suburban New

Jersey

have remained steady even though the supply of firewood has been diminished

by environmental restrictions on cutting. The Wall Street Journal reports that sales of gas

fireplaces are outpacing sales of wood-burning hearths and that "people are burning

less and less wood." Use supply and demand analysis to show why firewood prices

are not rising while the quantity of firewood burned is declining. (Hint: Allow for

simultaneous shifts in the demand and supply of firewood.)

2. Bloomberg Businessweek recently declared, "We have entered the Age of the Internet,"

and observed that when markets for goods or services gain access to the Internet, more

consumers and more businesses participate in the market.* Use supply and demand

analysis to predict the effect of e-commerce on equilibrium output and equilibrium

price of products gaining a presence on the Internet.